Rebuilding of Turkey post quake may spur steel demand from India: Industry

Since Turkey's own industry, a major player in world steel trade, has also been disrupted, demand from the western world may surge as well

Rebuilding and reconstruction of Turkey in the aftermath of a devastating earthquake is expected to pull in steel demand, throwing up opportunities for steelmakers globally including India, in more ways than one.

In 2021, Turkey’s crude steel production exceeded 40 million tonnes (mt). Of this, more than 22 mt was exported, making it an important player in the world steel trade. The impact of the destruction in Turkey, therefore, is expected to be two-fold: on the trade flow and rebuilding of the nation which will consume steel.

A major steel producer said the earthquake in Turkey created disruption in steel supply. “Some of the regions that produce steel have been impacted. So, there is a supply-demand gap which is keeping prices in balance.”

And as far as rebuilding the nation is concerned, the Indian steel industry can supplement steel supplies, the producer said.

Ranjan Dhar, chief marketing officer, ArcelorMittal Nippon Steel India (AM/NS India), said, “The Turkish government’s post-earthquake reconstruction plan will spur demand globally, possibly from the second half of 2023. Typically, India exports about 5-7 per cent and sometimes even 10 per cent. Turkey and India already enjoy very good steel trade relations; India will be one of the first preferred partners as far as steel supplies for the rebuilding of Turkey are concerned."

Brij Bhushan Agarwal, vice chairman and managing director, Shyam Metalics, said that the infrastructure in Turkey has suffered a lot. “Turkey has an FTA with the European Union (EU), but there has been a lot of disruption in the supply chain. And Turkish mills will be focused on rebuilding the country.”

“So, a lot of demand will come up from the western world as geopolitical issues ease and India has to play a very dominant role,” he explained.

In 2021, the EU was the top destination for Turkish steel, accounting for 31 per cent of total exports from the country.

However, the rebuilding of Turkey may not fuel demand for long products--mainly used in the construction sector-- without removal of duty.

Alok Sahay, secretary general, Indian Steel Association (ISA), said, rebuilding was important as regards to a diplomatic opportunity for India with Turkey.

However, he pointed out that it was not really a good opportunity for India due to the high import duty on TMT and billets. “It may be a good export opportunity for countries that have an FTA with Turkey with concessional import tariff (such as UK and EU among others), or are naturally lower priced due to geopolitical situation / high subsidies (such as Russia and China).”

Ashima Tyagi, associate director–pricing and purchasing, S&P Global Market Intelligence, said that for Indian mills to successfully export rebar or billet to Turkey, a lot would hinge on a number of factors such as removal of import duty on rebar and billet by the Turkish government; price competitiveness and quality standardisation and perhaps slower offtake in Indian domestic markets which could evince export interest.

According to Global Trade Analytics Suite by S&P Global, India exported 0.9 million mt of steel to Turkey in 2022, which was its fifth largest trading partner for steel exports. This included 70 per cent of flat rolled finished steel, 14 per cent of ferro-alloys, 3 per cent of semi-finished products and the rest bifurcated into a variety of niche products.

But it isn't just Turkey. At some point, the Indian steel industry also expects similar efforts in Ukraine to spur demand.